Are you familiar with the name Sam Brannan?
Sam Brannan is frequently cited as California’s first millionaire, during the famous Gold Rush of the 19th century. And guess what? He has never dug in the ground or sifted mud in order to find the precious gold nuggets everybody was desperately thriving for.
How did he manage to make a fortune, while staying warm, dry and clean-handed?
Well, he simply was able to sell what gold prospectors needed to try to extract the shiny stuff: picks, shovels and sieves. 300’000 people rushed in California to find gold, most of them in 1849, which gave rise to the moniker “the San Francisco 49ers”. And most of them became Brannan’s clients, eventually.
Fast forward in the 21st century, we witness a data collection and analysis rush, with the unstoppable emergence of data centers. In this context, we can easily identify the “data collectors”, like Microsoft, Apple, Amazon, Alphabet or Meta, among others
They must relentlessly invest in hardware to digest these gigantic amounts of data aimed at feeding their Artificial Intelligence ambitions. But these data centers generate high levels of heat, and therefore absolutely need cooling to function properly.
This is where a group of companies, the “data centers coolers”, come into action. Companies like Vertiv, Trane Technologies, Johnson Controls International, Lennox or Carrier provide big tech with indispensable cooling solutions.
As shown on the chart of the month, an equal weighted basket of these 5 stocks has vastly outperformed an equal weighted basket composed of Microsoft, Apple, Amazon, Alphabet and Meta in 2024.
And this confirms that, each time a big investment theme arises, the largest beneficiaries can be found well beyond the usual suspects everybody thinks about at first glance. And that’s good news: we know that the Magnificent-7 capex will be massive the next few years. And many companies will benefit from it. Heating, Ventilation and Air Conditioning stocks are just one example; from Building Materials to Energy Producers or Utility service providers, there are plenty of opportunities for good stock picking that should last for a while. It is time to be curious and look for other long-term winners in this AI craze.
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